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Thursday, March 22, 2012

The market did very little on Wednesday, which is actually a somewhat encouraging sign for bears. To some degree, one can gauge who's in control by simply looking at which price direction the market is stuggling to advance. The move down off the recent high was fast and easy -- but, especially on Wednesday, the bulls struggled to regain that ground and didn't get too far. This suggests that the bears remain in control, at least for the short term.

This further suggests that the preferred view from the past couple days, of at least one more leg down, will probably come to pass. The bigger question is whether there will be a new high after that leg. I remain in favor of the idea that the market is in the early stages of an intermediate trend change, but until there's confirmation, there are no guarantees.

Again, I feel the real test will come at the recent breakout levels for this indices. It's premature to be overly bullish or bearish until there's a backtest of prior resistance, to see if it's become support. What happens from there should tell us future market direction with a high degree of certainty. Of interest: the Trannies have, so far, failed that backtest; NYA is approaching its backtest; and most of the other indices haven't reached that prior resistance zone yet.

For the short term, as discussed, it still appears there's at least one more leg down coming. The zone to watch for a potential bounce is 1380-1391 SPX. If the market can break through there and take out the prior wave 1 high, that will rule out the fourth wave. The alternate bullish count, which envisions the possibility that this is wave 2 of (v), cannot be ruled out until the prior wave (iv) low is traded beneath. I continue to give that bullish count low odds.

I also wanted to update the RUT chart, which continues to present a very nice bearish trade trigger.

And I wanted to update the Chevron (CVX) charts, previously published in this article, where I called a top in Chevron (note, the linked article contains several additional big picture charts). Chevron has broken down from its presumed ending diagonal, and if this count is correct, should make a rapid move down over the next couple months.

The chart below shows the rough path expected to be taken by Chevron. Note that the chart below is not intended to be time-accurate, merely a rough guideline as to the expected price movement.

In conclusion, things continue to appear promising for the bears, at least over the short term, but there is as yet no confirmation of any meaningful trend change. If the preferred count is correct, then a top is either in place -- my "margin of error" count says there could be one more new high. I do expect this is the end of the road for this rally one way or the other. In the meantime, there are some trade-able short term patterns presenting themselves -- also, in a perfect world, the Creative Article Title Fairy will leave some nice new titles under my pillow tonight. Trade safe.

PL, the article is very high quality. It made me laugh, it made me cry...The confirmation and invalidation targets are great to include. One suggestion may be to include a tutorial of sorts in the future on how you arrive at them, we already know where you get your creative titles now! :) Save goes for bearish or bullish trade triggers. I'm keeping a close eye on the one in the RUT. Thank you again for continuing to update that chart. I see futures are down today with TF down nearly 1%.

Good morning PL,' what if ' say INDU is finished (it looks it ) but NDX has one more push left in the tank, and maybe SPX too?Could be the first sign of the trend breaking?FTSE looks dead and in need of burial ( as do DAX and CAC40) , and this BP Ichi Moku chart here looks pretty terminal.Kind regards

Good morning PL. Thank you for your beautiful analysis. I agree with your preferred count with the fact that the reality is sitting in gradually in front of those unrealistic hopes and expecting both (coming) worsen US economic data and dismal Q1 earnings.

Ichi Moku of R2000, the furthest along in a possible trend reversal.It looks as if it has begun down as chiku is below the candles (just).I would be quite surprised if chiku rose above the candles in a new high. Low probability, but possible.

I guess you could label this a megaphone or expanding triangle but I like to see many more touches for me to label it that way. I am calling it a h&s. On the 60 I only get four touches, a bit too few for me to label it as a megaphone. The time factor directly relates to the touches; timing is harder to predict, exactly when a megaphone will end. But in what I have labeled it as a h&s, the end is determined by the break of the neckline (red lines).

The perfect combination.....whit and technical perfection. Thanks for your analysis oh EW master. Your "Objectivity" abounds. With regard to Titles, perhaps the writers for Ron Paul are looking for work. Are you concerned about the "expected" earthquake? Taken any precautions...such as building an Ark?

Possible bear flag on the 120 es. For the h&s to work I would really like to see 90 to 91 hold ideally. BUT, it is possible that this is only an EW4 down move (120) and the EW5 is to come today, tgt 1412.50. We must break lower very soon (by 10 am) with the 91 holding. Absolute must hold levels are listed below, those are the 93-4 es level absolutely holding. If this is broken the rise to EW5 1412.50 will be very swift.

Spent most of yesterday evening reviewing Citigroup. My humble analysis is below. After being stopped out of a short position and "mad as hell" I put a sharper pencil to the chart and came up with this analysis. Question oh EW sage.....fifth wave extensions are likely to retrace twice (what I've read) which I believe means from the first low after five is complete there is a retracement to wave ii within the fifth wave down, and then another retracement back to the fifth wave low. Correct, or should I put the aluminum foil back on my head?

Peak 1/14 $51.50W-1 3/23 $43.40 I can count five wavesW-2 4/7 $46.90W-3 6/8 $36.76 I can count five waves and is less than 161.8% of Wave 1 ($33.80 would equal 161.8% of Wave 1)W-4 7/1 $43.06 This wave retraces 38% of Wave-3W-5 EXTENDED I can count five waves.

All TA does not work in a problem mrkt when the moves or waves are not clean. I use them all but EWs provide my better tgts, usually. But I also double check my tgts using GANN and TLs. Look on my 60 es chart, where I point out the EW-ABC to an up EW1-5 impulse w/failed EW5 to the down EW impulse. This was a mess to call, an unclean wave, and problematic. Clean waves provide for much more exact reads.

I got 90 by TLs, 89 by EW and it went to 87, actually 86.75, for the low. When there is variation in the tgt levels I get this is what happens.

Guys, since Bernanke has us all in the cider press and has promised to keep the pressure on until every last saved dollar is in equities, why can't this go one until the election in November? I'm still new to EW, but it seems if you keep widening your perspective, you can keep relabeling the trend. Love to hear your comments.

Well I'm guessing no matter how I answer the questions someone is bound to get bent out of shape. But here it goes (ruffle your feathers everyone lol); I honestly think Gingrich has the best ideas and out of all of them makes the most sense when he talks but that isn't going to happen. I am not for Obama whatsoever for many reasons. I'd rather see Santorum be the President, but it looks like the Republican big-wigs are going to make sure it is Romney. Either of them compared to Obama would be very positive for the long term future of our nation, in my opinion. How about you?

Possible Romney/RAND Paul ticket in the works....otherwise Romney loses. Santorum...met him at a gun show...nice guy but not very good when not scripted...no filter + narrow focus = poor politician in general. The nominee has already been chosen anyhews.

All I know is that it appears our country is on a course to become like Europe, running unsustainable deficits. I don't trust Obama to fix that seeing as he's added as much to the deficit in 3.5 years as Bush did in 8 years (and I think Bush doing that was wrong). Especially when he promised during his campaign that he would have deficits reduced by 50% at the end of his first term. And he did acknowledge during the campaign that we were in the midst of the worst economy since the Great Depression, so he knew how bad it was. Did you see Tim Geithner get asked in front of Congress if he was able to make one last & final request to raise the debt cieling what that # would be? He really didn't want to answer (not sure if he even knows) and stated that the # would make Congress very uncomfortable.

Intriguing move to select Rand Paul - Rand has a future as a legit Presidential candidate in 2016/2020. Be real interesting if he would opt to associate with Romney cause Mitt might actually have a shot then, but I would be surprised cause that could backfire on him.

PL...from the March 6 low of 1366, to the recent high of 1414 (hourly), appears as though five waves up are complete with corresponding Fib ratios. Wave 1 length was 33, wave 3 was 34 and wave 5 was 24. Fifth wave possibly complete?

I hear alot of talk that Marco Rubio will be the VP, but anything can happen. I'm just concerned for my two children. Will they grow up in a nation that turns into Europe, or will they grow up in the best and strongest nation this planet has ever known. I think our future has been, and is hanging in the balance.

Notice how Mitt and Ron were nailing Santorum last debate...total tag team. Somebody made a deal. Rand isn't his daddy, but the RP block will otherwise go Perot and tank the Republican party out of spite as they see no difference between Mitt and Barry...just a continuation of the establishment. IMO

They're pumping Rubio within the party but I think he is a diversion. I'm worried that we'll be eternally involved in debt creation/CB-driven wars, and that my kid (and yours) will be used for cannon fodder over some BS concoction of an "enemy to freedom".

I believe it is Rand Paul that said we have about 2-3 years to do something meaningful (instead of talking or fighting about it) to corral the deficit issue then after that it will be too late. Imagine if China, for example, quits buying our debt? We'll be ruined. I'd rather not find out what the world will do if they think we are 'too big to fail', let's just fix it now so that isn't something we have to deal with!

Debt = creation of money. There will be no change until a paradigm shift occurs as to how money is to be created. That is unlikely to occur in the absence of *severe* political, social, and financial repercussions.

I missed the entry last night so I think I'll have to wait until tomorrow to see if this retreat is for real... I don't want to jump in now just in case today proves to be a repeat of March 6, with a sharp rebound coming tomorrow...

I'm one of those California Republicans - aka - moderate, so am leaning to Romney, although would also vote for Paul if it weren't a throwaway vote.

At this time in our history, and I think that this election will be a major cross road when looked at from a historical perspective, I think a vote for a fiscal conservative in both Executive and Legislative branches is the only way for us to save "the American Dream" so to speak. So for me, a candidates fiscal policy stance is my prime concern.

My concern with the current Democrat field is that they have proven their intent to spend, break many of the rules of business like rearranging subordination rankings for political reasons and head more toward European style socialism at any cost.

I'm sure Paul would be a fiscal conservative, but his other views on governing make him unpalitable to the large majority. Santorum and Gingich won't win in a general, and my HOPE is that Romney will actually be a fiscal conservative that can work with congress (UNLIKE Bush). I also know that Obama will continue to tax and spend into oblivion until we run out of trees to print dollars.

Of course... there is a third party team on the horizon... and I'm sure from their past performance, they WILL deliver on their promises.

just calcs on how it moves...I could be wrong but if you watch the pre market prices, they're usually a wide range that will kinda let you estimate the market movement for the day. I'll come back in at a better price...or I could be completely wrong. UVXY is not a buy and hold right now...it works well as a DT...or once again, I could be completely wrong.

Agreed...Repub game plan has always been repress unfavorable votes. On the flipside, the Dem game plan has always be to encourage favorable participation (including the graveyards) -- "Vote early, and vote often." Either way, just ask Diebold and they'll tell ya who will win.

understood......i played tvix 4 times and made money and was very lucky on my last trade to do so. remember all here who explained wierd things going on with tvix and to use uvxy instead.......so since i wanted to get into low vix levels , uvxy i finally did buy.....will c how it goes

Approaching Europe closing, RUT looking at potential double bottom pattern intraday. FAS collapsed below 107.35 support, I would look at that level as resistance until about April 10, which is 3 days before JPM and WFC report quarterly results. I expect recovery to the days highs by 3 pm. Then truth will be told on this downleg. As of right now the up move is beginning

This is mad. TVIX dropped like a stone, back to where it was 8 days ago. But UVXY is worse, way below 8 days ago. This is mad. I think the next time one sees a divergence, with TVIX rising for days, it would be good to dump TVIX then.

This piece seems to say that that TVIX value could plummet the moment shares are issued again. http://blogs.barrons.com/focusonfunds/2012/03/06/one-of-these-volatility-funds-is-not-like-the-others/?mod=BOL_qtoverview_barlatest

Well we sliced through PL's bear trade trigger on the RUT like the proverbial knife or like that supermodel that disappeared through the floor. It is now bouncing off of a trendline from March 1 to March 9th. Hopefully, that will have just as much staying power and we motor right down to the trade trigger target level of ~812 or so.

PL, if you have a moment, the EW guideline I read up on suggest an initial target of 817.29 (100% of Wv 1) and if that breaks "look for it to reach 162% of Wave 1 which would be 807.19. Have I missed something? TIA

So am I. But I watch it from a very focused perspective of "what is AAPL doing relative to the $NDX?" I can't emphasize enough how "telling" that ratio is. You've more than welcome to read the write-up I did on that and to check out the ratio every day if you like. The bottom line is that when that ratio is falling, the NAS has lost it's leadership and the $NDX falls... 100% of the time. (Ok, 99.43% of the time.) It actually doesn't even matter whether AAPL is rising or falling... as long as it's under-performing the $NDX, the $NDX will be headed lower if it isn't already.

TVIX appears to be putting in the fifth wave down from the high on 2/16. HIgh was $20.69 wave i $15.62. wave ii was $17.60 and wave iii was 13.50. Wave iv $15.74 and with the third wave measuring only $4.10.....Wave v should not go below $11.64. Anyone?

The RUT has retraced to the 23.6 fib number of 820.55. It needs to hold here or 822.93 could be next. I hope Katzo's 80/120/90/140 rule works today. We could see the RUT at 812 or so at the EOD if he is right.

Well, it would be San Diego or L.A. or S.F. - those are the big zones with lots of people. Unless the ports had to close for a long time, I would not expect too much disruption outside of the state itself. Tidal waves - different story down in the south.

Good eye trb. I have yesterday's high at 833.82 (according to FreeStockCharts.com). It's a small difference but still these things can be important when calculating targets and such. Who do you use for your data? I'm looking for a website that has better real-time streaming but has all of the same great tools that FSC has.

BTW: does your handle reference some time of shooting term? I looked online and couldn't find your combination of terms.

I subscribe to stockcharts and used the wrong number. I should have used yours for the right shoulder high. I will recalc the the 23.6% fib number. Yes it does. It is the actual distance of a target based angle compensation. a 30 degree incline or decline reduces your yardage to target.

I've learned (the hard way) to assemble the facts and act like Dirty Harry. OBV does not support lower prices....stochastics are at the lows, MACD Histogram is not confirming. I think I'm right and this is when were suppose to buy.

Very tough read today, think we are headed up. We got the down 80, did not get the down 120 (right?) I was driving to work. So my rule may be invalid. Best to take profits when offered, you never know, a giant squid with funnels could suck money out of the mrkt.

Copper continuing to weaken - sliced like butter thru 50 and 200 MA's this am, which was right around Katz's watch zone from earlier this week at 3.80, and hasn't looked back. Stands at 3.76 now and looks poised for the prom date at the 3.70-3.72 level. Below that lies lower trendline at 3.65 or so and below that is trouble all the way to maybe 3.40 or more.

And the PM's look downright weak - gotta feel equities must follow, but of course timing is everything.

It must be used with discipline and stops, stops, stops, or else 3x's will treat you like the fresh face in the cellblock. You must run them with absolute self-control. Max profits/losses are obtained during a *distinctly trending* market. The trend is 3x your friend. Daily (not intraday) Volatility/chop/sideways markets will destroy both sides of the trade taking both side's money (see the prospectus). I have made a a lot and lost a lot with these. just remember "stops", disciple, and taking the distinct trend for the period, and it will work....but then again that applies to most trading.

Speaking of guns...read an article at the hospital yesterday about John Hinckley....DMF is walking around free (10 hours at a time) on a regular basis. Really surprised no one has sent him packin yet. I think I'll get my watergun and waterboard him.

It is pushing at the 0.618 and I guess the W%R bottomed is providing a support. It could drop to 10.14 since there is a moderate percentage chance that wave 5 could equal wave 1. A bottom at 10 would be it, IMO.

Lol. I knew you would understand. I do a lot of longer range stuff and am always messin with different angles and altitudes. Reading wind thru the scope has been a tough learn but gettin better. But at 800 yds I still need so much practice.

As a measure of the appetite for risk, it's still pretty hard to beat the CRX (commodities only related stocks). Here's the CRX Daily, taken from the article on the topic of the CRX:SPX ratio. It's still as valid today as the day it was written. Giving very helpful signals now as well. I hope you can benefit from what this is telling us... it's saying that deflationary forces are at work.

I wish I had some brilliant TA story to tell here, but I don't. :) It's simply a momentum play with GOOG being extremely bullish this week and it going strong against the market today. The risk/reward ratio for a 1-2 day play is very high (25% return potential). Assuming it doesn't tank, I'll probably close it out in the morning.

Not again? I was trying to post a comment about some very interesting signals coming from the CRX which point to deflationary forces seeming to be accelerating. A very similar comment was posted on my own site, complete with a couple of links that Disqus won't allow me to post here today. It looks like I'm screwed for the day here as far as links go, so if you'd care to see that comment and the charts, you can just click on my name I guess. It should take you directly to the latest post on that site. The comment in question should be right up there near the top of the comments. Sorry about this, but that's the effect that trolls have when they trash an innocent person's record with Disqus. Thanks a lot Wagner et al.

Think within about 15 minutes we should start heading down again. 84 ES is the key. If we do not then I am calling it a day for trading, will basically have run out of time for something meaningful to happen. $RUT down 1.12%; $TRAN down 1.99%, leading the way?

He is a cycle/timing afficiando. Doesn't like to own anything that's not on a "cycle up" mode. So with his cycles projecting a low in April-May for Gold/Siilver and May-June for Crude...he's waiting. Price won't matter to him when the cycles bottom.

jbg, today's the big day for your prediction. No way would I hold you to your user name change promise. I am impressed with how I think you arrived at this date. Does it have to do with this being smack dab on the nose for new moon, allowing cover of darkness for stealth attack?

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